Performance Food Group Company (PFGC) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to PFG's Fiscal Year Q4 2026 Earnings Conference Call. [Operator Instructions]. And just a reminder, today's call is being recorded. I would now like to turn the call over to Mr. Bill Marshall, Senior Vice President, Investor Relations for PFG. Please go ahead, sir.

Thank you, and good morning. We're here with Scott McPherson, PFG's CEO; and Patrick Hatcher, PFG's CFO. We issued a press release this morning regarding our 2026 fiscal fourth quarter results, which can be found in the Investor Relations section of our website at pfgc.com. During our call today, unless otherwise stated, we are comparing results to the results in the same period in fiscal 2025. Any reference to 2025 and or 2026 or specific quarters refers to our fiscal calendar year unless otherwise stated. The results discussed on this call will include GAAP and non-GAAP results adjusted for certain items. The reconciliation of these non-GAAP measures to the corresponding GAAP measures can be found at the back of the earnings release. Any reference [indiscernible] on this call and in the earnings release contain forward-looking statements and projections of future results. Please review the cautionary forward-looking statements section in today's earnings release and our SEC filings for various factors that could cause our actual results to differ materially from our forward-looking statements and projections. With that, I'd now like to turn the call over to Scott.

Thanks, Bill. Good morning, everyone, and thank you for joining our call today. This morning, Patrick and I will review our results for 2026, discuss industry trends and walk you through our expectations for 2027 and beyond. As we close out the fiscal year, I'm proud of the passion, dedication and resilience shown by our 44,000 plus associates. The year certainly brought its share of challenges as consumers continue to navigate higher prices, distributors faced operating cost pressures and external factors weighed on the broader food-away-from-home industry. Despite these headwinds, our team rose to the occasion and posted excellent results. We are excited about what 2027 has in store for Performance Food Group. Our company is well positioned to build upon recent trends and accelerate our financial performance. With the upcoming fiscal year, we have visibility into revenue, margin and profit opportunities, positioning us favorably to achieve our 3-year outlook. Headlining our performance in 2027 is anticipated growth across all 3 of our business segments. The foundation of that growth is our continued investment in our sales organization sales technology and most importantly, our customer relationships. In Foodservice, ongoing market share gains with independent restaurants, recently awarded national account business, and a strong pipeline of opportunities position the segment well for another year of solid growth. In convenience, we look to benefit from the momentum generated by our 2026 market share wins supported by a healthy sales pipeline and continued outperformance relative to industry trends. Our differentiated value proposition, scale and customer service capabilities continue to resonate in the marketplace, and create opportunities for profitable growth. Specialty enters 2027 with strong sales momentum, expanding opportunities across new verticals and significant long-term potential in e-commerce. Together, these growth drivers reinforce our confidence that all three segments are well positioned to contribute meaningfully to PFG's performance in the year ahead. From a margin perspective, we continue to benefit from our scale, growth profile and vendor relationships as we work to achieve the $120 million to $125 million procurement synergy target we outlined at our Investor Day. I'm confident we will meet or exceed the high end of that target by the end of fiscal 2028. Additionally, we launched over 580 brand SKUs in 2026 and bringing our total number of branded SKUs to approximately 25,000 across more than 85 brand families. Our customers and sales organization find tremendous value in our high-quality brands and we see this as a competitive advantage in the market. Lastly, let's touch briefly on our commitment to drive operational efficiency and safety results. In transportation and warehouse, we continue to make significant investments in infrastructure technology and staff, building a foundation to efficiently onboard future growth. On the safety front, I can only thank our people and the work they have put in to PFG's safety culture as 2026 saw reductions in accidents and injuries benefiting insurance costs. Taking a step back, let's now discuss some of the highlights from the quarter across our three business segments. Our foodservice results can be summarized in one word, consistency. Due to the ups and downs of the external market, our organization has delivered independent case growth, market share gains and margin improvement. We closed the fourth quarter with 5.8% organic independent case growth, putting our full year improvement of 5.9%. In the context of the external environment, these numbers are powerful and a testament to our sales organization's connection with our customer base. According to Black Box, foot traffic trends in the restaurant space were consistently negative every month of fiscal 2026. And However, by adding new independent accounts at a pace of roughly 5% in the fourth quarter and gaining wallet share with existing accounts, we have continued our pace of market share gains. A key driver to our continued independent performance is our unwavering focus on our selling organization. Investments in high-performing sales associates, customer-facing technology and continuous expansion of our brand portfolio will continue to be foundational in our success. Our PFG brand portfolio grew faster than our overall business and represented approximately 54% of cases sold to independent restaurants during the fourth quarter, excluding Cheney Brothers or just over 50%, including Cheney. We see our brands as a competitive advantage with a long runway of profitable growth ahead. In our chain restaurant portfolio, we saw case volume declined slightly in the quarter, though still outperforming the foot traffic results reported by Black Box. We are now lapping new account onboarding from last year and anticipate fairly similar results over the next 2 quarters. We have visibility to new business in the second half of the fiscal year as we expand our relationship with Jersey Mikes. This additional business will help our chain volume as we progress through the fiscal year. Looking across the entirety of 26, I'm incredibly proud of our Foodservice segment performance. Despite several headwinds, our foodservice organization posted nearly 6% independent case growth and nearly 9% revenue growth. As we look ahead to 2027, we believe we can build on our momentum and layer in efficiencies in both gross profit and operating expense to deliver profit growth for the organization. Shifting gears, our convenience segment continues to be the engine of our profit performance as new business runs, market share gains and solid execution converted mid-single-digit revenue growth into double-digit segment level adjusted EBITDA performance. The performance is even more impressive in the context of the industry backdrop, which continues to deal with the impact of high gasoline prices and inflation-led pricing across in-store product categories. Over the course of the fiscal year, Cormark grew sales across all customer account types, national, regional and independent. The biggest contributor to this success was our national accounts portfolio, led by the addition of Loves and Racetrack. Overall, national store count grew 16% in 2026, producing 6.9% case growth. Market share growth underpin the success of our convenience segment. In fiscal 2026, Cormark grew cases in each of the key non-nicotine categories of foodservice, candy, snacks and health and beauty. Taken together, these categories increased mid-single digits in the fourth quarter compared to an industry decline of nearly 6%. The result was a sizable pickup in market share. These top line wins are flowing down the income statement, resulting in double-digit segment profit growth. Total segment EBITDA increased 10.4% in the fourth quarter, driven by gross margin improvement and disciplined operating expense controls. Looking ahead, the addition of Love's and Racetrack will continue to be an incremental benefit to our convenience performance through mid-fiscal 2027 as we discussed last quarter, we have visibility into both additional customer wins and some offsetting losses across the fiscal year. We believe that our ability to service the convenience market with a full portfolio of both traditional center store, consumer packaged goods and food service items is a key component in our ability to win new business. Our customer discussions often include representatives from our Cormark segment as well as from Performance Foodservice and Vistar setting PFT apart from the competition and resulting in higher conversion of our customer pipeline opportunities. Overall, our convenience organization is well positioned to have another strong year in fiscal 2027 and build upon its momentum in the coming years. I will close with our Specialty segment, which rounds out our portfolio across the food away from home market. Specialty certainly wrestled with its own challenges in '26 as persistent candy and snack inflation, a choppy consumer environment and elevated operating costs impacted results for the year. At the same time, there were a number of highlights and reasons for optimism as we move through 2027. Top line performance for specialty accelerated in each of the final 3 quarters of the year finishing with solid 6.6% growth in the fourth quarter. Case in sales growth was the result of new account wins and positive performance in the vending, campus, travel and hospitality channels. As we move into 2027, we expect operating cost pressures to persist in the first half of the year, eclipsed by continued sales momentum, providing a strong top and bottom line flows to the year. Specialty has also entered new markets, which are providing pathways for growth in '27 by collaborating with our foodservice organization, Vista identified opportunities in the specialty grocery channel and began shipping products to various customers in late fiscal 2026. We believe that the unique position Vistar holds with direct to business and consumer opportunities, fresh and frozen shipping and a delivery platform tailored to smaller venues will continue to pave the way for sustainable growth in the diverse food away from home market. To summarize, we finished 2026 with solid revenue growth from all three of our operating segments, our strategy of competing across the entire food away from home market is paying off and producing consistent market share gains. We believe we are well positioned for an excellent 2027, keeping us on track to achieve our 3-year targets. I'll now turn it over to Patrick, who will review our financial performance and outlook. Patrick?

Thank you, Scott, and good morning. Today, I will review our fourth quarter results, provide color on our financial position and review our newly issued guidance for 2027. PFG's total net sales grew 6.4% in the fourth quarter with growth in all 3 operating segments and particular strength in food service. Total company cases increased 3.5% during the quarter, highlighted by a 5.8% organic independent restaurant case growth. Total company cost inflation was approximately 4.7% for the quarter in line with what we experienced in the prior quarter. Food service inflation of 2.7% accelerated sequentially as we had expected. We experienced continued deflation in the cheese, poultry and egg categories and inflation in beef. We did see a deceleration in foodservice product inflation in July to just below 1%. We Specialty segment cost inflation was up 5.3% year-over-year and just slightly higher than the prior quarter, mainly the result of candy and beverage inflation. Convenience cost inflation was 7.1% year-over-year and was 64 basis points lower than the prior quarter. The inflationary environment has been active over the past several years, but as a company, we have demonstrated our ability to handle a range of outcomes. We expect the overall inflation rate to remain in the low to mid-single-digit range for fiscal 2027. Moving down the P&L. Total company gross profit increased 8.3% in the fourth quarter, representing a gross profit per case increase of $0.34 as compared to the prior year period. This improvement was driven by strong mix, execution of our procurement initiatives outlined in our Investor Day and continued growth of our brands. We're very pleased with our gross profit results which demonstrate our ability to execute on our priorities outlined in our 3-year plan. In the fourth quarter of 2026, PFG reported net income of $162.3 million a 23.4% increase year-over-year. Adjusted EBITDA increased 7.4% to $587.5 million, which was at the upper end of our guidance range implied by the full year outlook we provided in May. Diluted earnings per share in the fiscal fourth quarter was $1.03, while adjusted diluted earnings per share was $1.59 and an increase of 2.6% year-over-year. Our effective tax rate was 26.8% in the fourth quarter, an increase from 25.6% last year. We expect our full year 2027 tax rate to be close to our historical range of around 26% to 27%. A note on our exposure to diesel. During fiscal 2026, our team worked to manage the increase in diesel prices through our surcharge program. In the fourth quarter, the net impact from higher diesel expense was approximately $16 million, a sizable increase but roughly in line with the projection we provided back in May. Due to the volatility in fuel prices, we have examined our approach to fuel expense. While our strategy has done a nice job of mitigating fuel volatility we are looking at additional ways to help manage our exposure in the future. In early July, we entered into a diesel fuel swap contract on a portion of the fuel exposure that is not covered by surcharges. This contract runs for a 12-month period. We're evaluating hedge accounting treatment for our fuel swap under the updated accounting standards, which could allow us to directly offset movement in fuel expense in the operating expense line. [indiscernible] to provide additional visibility into our cash flow, reduce volatility and increase our ability to forecast financial performance. Turning to our financial position and cash flow performance. Over the full fiscal year 2026, PFG generated over $1.4 billion of operating cash flow, an increase of approximately $200 million compared to last year. We invested $384.1 million in capital expenditures during 2026. We have been diligent around new capital projects and expect full year 2027 CapEx to remain below our long-term target of 70 basis points of net revenue. The organization is striking a good balance of investing in infrastructure and high-return projects to support our long-term growth while maintaining excellent free cash flow performance. In 2026, we generated more than $1 billion of free cash flow, up approximately $326 million compared to last year. We are extremely pleased with our cash flow, and we are fully committed to investing back into our business to support our growth. We closed the fiscal year with net debt just below the top end of our 2.5 to 3.5x leverage target range, benefiting from disciplined working capital management and strong cash flow. As a reminder, the first quarter is typically a period of investment, and as a result, we anticipate our leverage to remain towards the top end of our range. The M&A pipeline remains robust, and we continue to evaluate strategic M&A. We will continue to apply our typical high standards and robust due diligence to evaluate high-quality acquisition opportunities. Turning to our guidance. Today, we shared guidance for fiscal 2027. For the first fiscal quarter of 2027, we expect net sales to be in the range of $17.9 billion to $18.1 billion and adjusted EBITDA to be in the range of $510 million to $530 million. We expect our quarterly EBITDA growth to accelerate as we move through the fiscal year, in addition to new business wins in all 3 segments, which will help our top line we have a number of initiatives that are expected to boost our profit results, including an acceleration of our procurement efficiency efforts, comparing against elevated OpEx related to the opening of the Florence, South Carolina building and continued progress on cost synergy targets related to M&A activities. For the full fiscal year, our sales target is in a range of $72.5 billion to $73 billion. We expect full year adjusted EBITDA in the range of $2.125 billion to $2.225 billion. Our full year guidance range includes the benefit of a 53rd week, which will occur in the fiscal fourth quarter and helps results by approximately 2%. The midpoint of these ranges represent year-over-year growth of 7.2% for sales and 12.7% for adjusted EBITDA. This keeps us on track to achieve the 3-year projections we announced at Investor Day, with sales in the range of $73 million to $75 billion and adjusted EBITDA between $2.3 billion and $2.5 billion in fiscal '20. To summarize, we are very pleased with our progress. We are in a solid financial position, which supports our growth investments and capital return to our shareholders, and our execution sets the stage for a strong fiscal 2027. Thank you for your time today. We appreciate your interest in Performance Food Group. And with that, Scott and I would be happy to take your questions.

[Operator Instructions]. We'll go first this morning to Kelly Bania with BMO Capital Markets.

I wanted to start with just the outlook for fiscal '27 and I think -- Patrick, I think I heard you say growth for all 3 segments, but can you share with us any more specific color by segment in terms of how they fit into the EBITDA outlook for the year, I guess, really kind of in that 8% to 13% range, excluding the extra week, should they all be within that range? Or is there any outliers or any factors. And also, what is the outlook for your corporate overhead, I guess, given the improvement that you had there in the fourth quarter?

Kelly, this is Scott. Thanks for the question. A lot to unpack there. So let me just start with growth. I think that was really the headline of the question. So when we think about food service, always internally, we are focused on independent account growth and independent case growth. And so certainly, internally, we're always shooting for that 6%. And so that will certainly be a driver when we talked about our case volume for national. We were a little bit negative this year. That was largely based on the macro, but we did talk about Jersey Mikes that will come in, in the back half of the year. So that would be a really nice boost in our national accounts. So really a good pipeline beyond that with national accounts. So from a food service standpoint, I feel really good about the growth algorithm that we'll see convenience. We obviously have the benefit of loves and Racetrack, continued strong pipeline there and their continued outperformance. And then specialty has been a really nice story for the last 3 quarters, they've accelerated and really have great line of sight to continued growth in specialty. We talked about a couple of new verticals we're working on that are starting to pay dividends. So we're really, really good about the growth perspectives for '27. And I'll just touch on margins, and I'll let Patrick talk about the expenses. And from a margin standpoint, again, the mix that I just talked about will really help drive margins then we've talked a lot about our procurement synergies. And we have great line of sight as we move through '27. That's going to be a building story but really have a great visibility into quarter-by-quarter where we'll see gains in procurement synergy. So [ Phil ], top half of the income statement, we feel great about how we're set up for 2017. And Patrick, do you want to touch on the expense side?

Yes, Kelly, just a couple more things on OpEx. Obviously, talking about the full year guidance, we're going to see in Q3 and Q4 specifically, we'll start to see easier comps related to the chain OpEx that we've talked about for the last couple of quarters moving into the new Florence building. as well as we're obviously had some fuel pressures at the end of Q3 and Q4 that we'll start to see those ease in the balance of half of this year. And then finally, is your question on corporate, again, that's really -- it's really a segment thing. It's related to safety. We saw great progress in our trends with our segments. And so that did improve, and we saw that benefit flow into corporate in Q4, the trends are in a positive momentum. So we should see some improvement Lots of different dynamics go into those numbers, but that's all incorporated in the Q1 and the full year guidance.

Okay. And maybe just to follow up. You talked about some good visibility into the procurement savings and the initiative there. Maybe can you just expand on which segment that will flow through or maybe all of them, and just what you're learning through that process as you have those discussions with vendors?

Yes, Kelly, it's a great question. And as far as the flow through, most of that flows through food service. That's been the real focus of that initiative. As we move into the back half of the year, we'll also add Chinese volume to that. So that will certainly help with their procurement synergies as well. And then as far as the interaction that we've had, that gives us great visibility. We've really sat down with our entire vendor community and really walked through our growth over the last 5 years and the prospects that, that creates for them around efficiency, how we approach the supply chain. So really, it's been -- it's really been a win-win for both sides. And we've had great dialogue and we've had great negotiations. And through that, it's given us, like I said, great visibility kind of quarter-to-quarter of when we'll start to see those benefits flow through the income statement.

Thank you. We'll go next now to John Heinbockel with Guggenheim.

Want to start top line. Patrick, you mentioned 1%. I think it was 1% food service inflation in July. So what kind of took that down? And is that temporal? What are you budgeting for the year? Then maybe for Scott, the drop size, right? So drop size was up 1% and or just about, I assume, right, cases per line were down and penetration is up. What's your sense of that for the balance of the year?

Yes, John, I'll start and then turn it over to Scott on the second question. So on inflation, we did exit the quarter in that range exactly as we had projected. I think we said sub-3% and we ended at $27 million did call out that July dropped to sub 1 in foodservice. Largely, we obviously always are managing a large basket of commodities, and we do an excellent job of managing those. What we saw in July is that actually beef is starting to lap this mid-teen inflation from prior year and now is running kind of high single digits. So maybe it's early signs of beef normalizing. And then the other commodities that we continue to see deflation in our cheese, chicken and eggs. But those have been relatively stable from a month-to-month standpoint, and I'll turn it over to -- and then I'm sorry, as far as how we modeled the year, Foodservice, we did model in that low single digit, around 2% for the year. And the other segments very similar to how we exited Q4 with Vistar mid-single digits and convenience just slightly higher than that.

John, on the question around independent cases. So as you pointed out, really nice quarter as far as penetration. Most of that was lines for drop. So continuing to benefit from our salespeople and their connection to our customers. I think another big part of that is just the technology that we are now putting in front of our salespeople and our customers is really helping with recommendations, new item selection. So that -- I think that's really been a nice benefit to penetration. So that's been back-to-back quarters where we've seen nearly 100 basis points of penetration. And again, that's really driven by lines for drop. At the end of the day, though, the real driver of market share win has been net new accounts. We came in again right around 5%. So that's 4 consecutive quarters in that range. And that's going to continue to be the driver. It's really nice to see the penetration. Hopefully, that continues, Love to see that grow. But again, we're really focused on that net new account number as well.

And a quick follow-up for Scott. You guys don't talk as much about labor productivity, but I'm curious, from a margin standpoint, right, cases per hour per labor hour and cases per mile driven, what is -- when you look at going after that and the ability to move the dial. Where are we on that?

Yes, John, I think it's a big opportunity. It's one of the places where when we talk about technology, I think there's been a lot of conversation in our industry about AI. I'll start with fleet. We've done a lot of work on evaluating fleet utilization as well as our routing technologies. And we deploy standard software plus AI enablement that helps that. And so certainly, I think there's runway there. We have always been focused on our routing and routing efficiency, but definitely, I think there will continue to be runway. And then the other place is in our warehouse. And I think there's really two things there that I focus in on One of them is really technology enabled, which is really how we lay out our warehouses. So how you slot your facilities to optimize that PIK path. The other thing that we're doing technology-wise, is around inventory management. So we have -- we have been running a test now and have expanded that fairly rapidly around inventory counts using drone technology. So again, leveraging technology to be more efficient in our facilities. And when I think about metrics I really look at, we'll call it, cases per route. That's a key metric for us. We're constantly focused on improving our cases for route. And then to your point, it's really -- it's either cost per case or from a selection standpoint, it's how many units of select or selects in an hour. So it's our productivity metrics that we really hone in on. Thank you.

Thank you. We'll go next now to Edward Kelly with Wells Fargo.

I wanted to start with the guidance and I was really hoping that you could maybe dissect how you lap some of these onetime issues in terms of what you were thinking about for '27. I mean if we think about chaining I don't know. Maybe this is a $30 million, $40 million drag in '26 and then you have synergies ramping. It seems like that would be a big inflection. Fuel, I don't know, maybe that's more neutral now. If that continues into the first half deflation here, you have the cash [indiscernible] deal coming in. I guess what I'm trying to say at the end of the day is that the EBITDA guide ex the 53rd week is within the range, but it seems like you have a number of idiosyncratic drivers to do much better than that. And I'm just trying to figure out what's in the guidance for that.

Yes, let me start and then if Scott wants to add some comments, certainly can do that too as well. I mean I think one of the key points is we provided Q1 guidance to really show the cadence of the year. I just want to make sure that we're showing that Q1, we're exiting Q4 with some strong momentum, but we do have some of those headwinds like fuel still impacting us. And we actually expect the headwind in fuel Q1 to be very similar to what it was in Q4, maybe just slightly better. And then we'll see our acceleration on the top line, obviously, from the customer stuff that ran through. But the things that you're bringing up, we think that as we get into the second half of the year specifically, that's when you start to see the benefit of us lapping that OpEx from chain. And I think we sized that up in Q3 and Q4 as well. It's probably not as big as you highlighted there. But we do see some benefits there, obviously. And then the fuel becomes neutral to possibly a tailwind as we go throughout the year, but we did plan for fuel to be a higher expense this year based on how we exited Q4. And then we've talked about Cash way. And yes, so we really think that those are the key factors that are going to help us achieve that guidance, and we're really happy with where we are. And obviously, Scott mentioned the procurement savings, those will ramp throughout all of '27 and all the way through '28. So again, it's really a year of acceleration.

Yes. Let me just add a couple more things. We're a couple of months into the year. I think when we think about guidance, there's obviously a range for a reason. We think about the current state of the macro and how we're performing. And certainly, if we deliver that, and we think about that getting us to the middle end of that range. If we get some tailwinds, certainly focus on getting to the upper end and then don't want to talk about it, but if there's headwinds, certainly, that could push you to the lower end of the range. And so that's, I think, how we think about framing up the range. I do want to just touch on a couple of other things. you brought up Cheney. Cheney has certainly been an expense headwind over the last couple of quarters. We'll see that persist a little bit into Q1. But really, we've turned the corner there. That facility and Florence is fully rolled out. That actually is the fastest growing as far as case volume facility in the Southeast for us. So they've really kind of hit the ground running. And the other comment I'd make about just the chaining infrastructure. We talked a little bit about Jersey Mikes in the back half of the year. And that's volume that we probably wouldn't have been able to bid on or bid on effectively without the infrastructure of Chinese. So that -- that investment is really going to pay off as we get to the back half of the year and be able to fit in that volume into great facilities, great infrastructure, and that should really help us deliver from a bottom line standpoint. So I think Patrick touched on the highlights for me. It's growth across all 3 segments. It's procurement synergies. It's lapping some key costs. And then certainly with Cheney will grow in momentum throughout the year.

Great. And Scott, can I just ask you on the cost savings side. I think I heard you talk about sort of like a greater focus on sort of the middle the P&L moving forward. And certainly, looking at the margins of the company, it seems like they're from 30,000 feet anyway, it seems like there could be some real opportunity. Can you maybe just update us on sort of like what you think you guys can do there over time and the size of the opportunity in terms of like a generally more efficient organization.

Yes. I'd say from a gross profit standpoint, I was really happy with how we exited the year. I mean we had one of the best performances in GP across the organization that we've had in the last handful of years. That said, certainly feel really strongly about the procurement opportunity, and I frame that up in my script. As far as the $120 million to $125 million, and a good portion of that falls into '27 and '28, and that will build through '27 and continue on in ;the '28. when I talk -- when you talk more about efficiency, call it, the bottom half of the income statement, I certainly think there are opportunities I think we've kind of framed that up in our 3-year guide. When you talk about 50 to 60 basis points of margin enhancement, but the things I talked about earlier on the question from John really about what we're doing with fleet, fleet utilization, where we're leveraging technology in the supply chain, I think that's going to really help us. And so that's when we frame up that 3 year, I think that's how I think about the opportunity is being able to really add that 50 or 60 bps to EBITDA margins.

We go next now to Mark Carden with UBS.

This is Matt Rothway on for Mark Carden. So I was wondering if you could share a little bit more about the cadence of independent case growth in the quarter and then maybe how it's trending quarter-to-date.

Yes. Great question. One of the things I just wanted to take a step back and maybe shown out to our sales organization to finish the year at 5.9% and change. I've talked earlier on this call about us targeting internally a -- and we almost got there. I wish we had a 6 handle on it, but it was a great year from an independent case growth standpoint. In Q4, we were at 5.8%, which we are really proud of, considering that on a 2-year stack, that's right at 12%. So really a solid performance there. When I think about the cadence of Q4, we were -- I think -- in April, I think it was right around just under 6%. I think May was right at 6%, and our exit in June was just sub-6%, just a couple of ticks below. So -- and then we entered July kind of in that same range, just a couple of ticks below 6%. So still really focused for the quarter on the year as a company on being right around that 6% range and feel like we've got the pieces in place to get that done.

Great. And then any noticeable lift from the World Cup or sporting events like that?

It's a good question. We spent a fair amount of time kind of dissecting the bigger markets. You think about Boston and Kansas City and Dallas and places where we have facilities and quite a bit of presence I wouldn't say that we saw anything that was earth shattering. We saw some short-term lift around event days. But really nothing that I would say, created meaningful volume differential because of the World Cup in our space.

You next now to Lauren Silberman with Deutsche Bank.

I just want to start on the convenience capro side. I think, Scott, you mentioned some new business wins offset by some losses. Can you expand on what you're seeing in that segment from a competitive environment? And any color on how to think about convenience in fiscal '27, I think you guys had mid to high single in 3Q, 3.4% in 4Q. So just trying to understand some of those dynamics.

Yes. Great question. And as you mentioned, I mean, this year was -- I wouldn't call this a normal year from a growth standpoint. I mean we had an exceptional year to big iconic retailers. So certainly drilled case growth and sales growth in the higher single-digit range. I would say, historically, convenience is low single-digit range revenues and really strong high single-digit, low double-digit EBITDA performance. That's how I think about a normal convenience algo for that segment. As I think about '27 and how that's going to frame up, I mean, certainly, we'll see some nice benefit in the first couple of quarters from loves and racetrack. In the back half, we certainly have some really nice pipeline opportunities that will help us in the back half. We have had a couple of competitive losses. Then I would say we're just priced at a level where we weren't going to stay there. But feel like that segment, I go back 5 years, that segment has continued to gain share quarter-over-quarter, year after year. And so I think the back half of the year set up is really strong. You're going to see nice growth, continued market share gains and nice EBITDA performance for them even as we lap loves and raise tracks. So I think it's -- they're set up for a really solid year.

Great. And then I wanted to follow up on like operating leverage. So 26% driven by gross profit, OpEx, we've talked about, some of those dynamics. How are you thinking about gross margin versus OpEx and fiscal '27. And I just want to clarify the China piece. Are you saying you expect J&Ato remain a slight drag in Q1? Or is it just not a headwind in Q1, it starts to be a tailwind in Q2. Just trying to understand that.

Yes. Maybe I'll take the first part. And yes, so Lauren, as we go in to '27, we actually -- one, as we highlighted or Scott highlighted, our gross profit margin was really strong for the total company in Q4. And for foodservice, 15% was very strong, probably the best it's been. And we continue to see really nice gross profit accretion due to our mix due to the procurement initiatives. And so we should see some really nice leverage. Again, as Scott highlighted, all the activities that we're doing around or below the bottom half of the P&L on OpEx. So we do believe that we will see nice accretion. And again, it's an acceleration as we go throughout the year. So again, as I mentioned, we're going to see more fuel pressure this quarter, but we do expect that all to dissipate as we get into the comps in the back half of the year.

Yes. Lauren, I'll take the second half around Shane. So one of the things to remember about them is, seasonality-wise, they're kind of contra to the rest of the country. So this is really a soft quarter for them. our Q1. They build in Q2 and Q3, that's really their season. So there -- I would say there minimal headwind to neutral in the first quarter, but their momentum will really build as we move throughout the year. And the reason we have so much confidence in that, as I mentioned earlier, the Florence facility is fully operational, operating really well and growing faster than any opco that we have in the Southeast right now. So that's, I guess, one headline. The other piece would be the Jersey mics I mentioned and being able to flow that into not just the Cheney facilities in the Southeast. We are -- that will flow into some of our legacy facilities as well. But without changing, that would have been a real challenge. So that really makes it a great opportunity for us. And then we've talked about structurally as we get into the 2-year lap of that acquisition, which is in October. There is some structural costs that come out in October. They start coming out for next year. And then we are starting to -- with our brands, with our procurement initiative to incorporate chain into all of those activities. And so we have a great line of sight to building synergies with them as we move through '27 and into '28.

We'll go next now to Alex Slagle with Jefferies.